(October 23, 2008 – New York, NY) Low-income communities and the credit unions that serve them face a host of challenges triggered by the recent financial meltdown. CDCUs, like other credit unions, have suffered “collateral damage” from the subprime crisis, reflected in rising delinquencies, falling investment income, and decreased access to liquidity within the credit union system. Added to this, the social safety net for their members is shredding, as local government and community organizations cut services, faced with budgetary restraints.
In the face of these major challenges, the National Federation of Community Development Credit Unions (Federation) has responded by reinforcing its management and launching new initiatives for the coming year.
Meeting in San Francisco on October 11, 2008 the Federation’s Board of Directors decided to defer its planned executive transition and extend the tenure of long-time President and CEO Cliff Rosenthal, who had previously announced his intention to step down in the spring of 2010.
Federation Chairman Eunice J. Rogers explained, “The Federation’s Board of Directors discussed the economic upheaval we have undergone and looked to identify what the long-range impacts might be on the organization, and it became obvious to all of us that we are in uncharted waters. Because of this and other factors, the board unanimously decided to invite Cliff to extend his time as CEO of the Federation. His expertise, insight, and strategic vision combine to give us direction and stability as we face the uncertainties in the marketplace for both the Federation and our member credit unions.”
“I want to thank the Board of Directors for the confidence and support they have shown me,” commented Rosenthal. “The Federation has faced many challenges and fought many uphill battles over the past 35 years. We are in a stronger position than at any time in our history to help our members and strengthen the broader credit union movement. We believe that credit unions have an unprecedented opportunity to raise the profile of our industry and expand our reach to an American public much in need of fair and honest financial services and advice.”
In a time seeing a major contraction of financial resources, Rosenthal stressed that building partnerships is crucial to the Federation’s ambitious plans for 2009. “For years, the Federation has been working to develop cross-sector partnerships within the credit union movement. We are now forging new partnerships with prominent community development, social service, and philanthropic organizations that have national reach, including Goodwill International and NeighborWorks America,” he said. “This will enable us to reach many more communities than ever before.”
Several other initiatives will take Federation staff around the country. These include:
- Mortgage Counseling. With the help of the National Credit Union Foundation, the Federation has become the sole national intermediary for credit-union based mortgage counseling, funded by the federal Department of Housing and Urban Development (HUD). Under the Federation’s umbrella, fourteen credit unions across the country will provide homeownership and foreclosure prevention counseling to credit union members in dire need of assistance.
- Cities for Financial Empowerment. Chaired by New York City and San Francisco, a national Coalition of Cities for Financial Empowerment is developing campaigns to fight predatory lending, promote savings and the Earned Income Tax Credit, and expand financial education in low-income communities. “The Federation has been working with both New York and San Francisco on anti-poverty initiatives for a number of years now, and will help all types of credit unions -- not just CDCUs -- to become involved in these local efforts,” Rosenthal said.
Expanding Investments in Credit Unions
- 25th Anniversary Capital Campaign. The Federation’s Community Development Investment Program is entering the second year of a $25-million capital campaign. Investments and commitments since mid-2007 have topped $17-million, enabling the Federation to increase its liquidity deposits, secondary capital, and mortgage investments in its members.
- Mortgage Purchases. The Federation’s CDCU Mortgage Center, LLC, in particular, is playing a growing role in helping credit unions make more loans to their members. “By purchasing fixed-rate non-conforming loans in credit union portfolios, we are freeing up credit unions’ liquidity for additional lending,” Rosenthal stated.
- 1st HELP (First Home Emergency Loan Product). The Federation also won major infusions of federal funds that will provide reserves needed to leverage its resources. In September, the federal CDFI Fund made a $1-million grant to the Federation in support of its 1st HELP. With this grant, the Federation will expand its capacity to help credit unions help their members refinance out of high-cost or predatory loans and avoid foreclosure.
“We don’t underestimate the challenges,” Rosenthal summarized. “But this is no time to retreat in the face of the difficulties our communities face. This is a prime opportunity for credit unions to show what the movement is all about, by helping members in need. The Federation is here to help make that happen.”
© 2008 National Federation of Community Development Credit Unions.